A straw poll run by SMSF Adviser with 894 respondents has indicated that 505 or 56.5 per cent of SMSF practitioners oppose the government’s plans to extend the SMSF annual audit to three years for those trustees with good compliance history.
Almost a third of respondents, on the other hand, are in favour of introducing a three-year cycle, with 268 or 30 per cent stating they support the measure.
The remaining 121 respondents or 13.5 per cent said they were unsure at this stage and would like to see further details about the measure.
The announced measure has received a lot of commentary from professional bodies and the SMSF industry so far.
Reliance Auditing managing director Naz Randeria said errors and misstatements in the first year could snowball into bigger issues in subsequent years.
“This may require rectifications on a retrospective basis to the SMSF’s financial statements, tax returns and transfer balance account reporting, which could become a costly exercise for trustees,” said Ms Randeria.
IPA chief executive Andrew Conway questioned whether reducing the audit cycle would enhance regulatory oversight and transparency in the SMSF sector.
“We know that now more than ever, in the financial services space, sunlight is the best disinfectant. Without an annual SMSF auditor oversight, how will the regulator of the SMSF sector, monitor compliance?” he questioned.
The potential issues around the policy, Mr Conway said, go far beyond the impact on SMSF auditors and speak to the very confidence and transparency of the SMSF sector.
“Arguments around compliance costs are myopic at best as trustees are likely to be required to have a three-year audit at greater total cost than the current 12-month review. Will the unsubstantiated audit cost-saving be worth the significant risks such a measure introduces?” he said.
I think it is a simple measure when we look at the cost of Audits and the level of over the top compliance. I support the move. We do not have enough SMSF auditors anyway.
Massive failure is on the way……who would even think to propose this idea ????
what you are talking about here is basic super fund, they have some cash and shares and its money for jam for accountants and auditors. they charge 700.00 for basically nothing and on top of that you have the accountants/tax agent fees for another 1000.00. The CPA are up in arms about this but they are simply self serving their members and their fees. these are the type of smsf funds that should only be the subject of an audit every three years.
So how do you decide what funds need auditing? Is owning 5 shares simple but 6 complicated? What if they regularly buy and sell shares but the value is small?
If they make a mistake in the first year and it isn’t picked up for a couple of years until the fund is audited should they get penalised for each year the mistake is uncorrected?
Most audits are a lot less then $700.00, audits for simple funds are half that.
Ron, I suggest it should be wound up in that case. I can admit some funds with for example $500k, 10 shares an one bank account are very clean and could be audited every 3 years but the way the government is trying to classify clean funds is convoluted. Most of the funds I audit end up clean after much to and fro, rework, error correction and beating info out of the Trustees. If they want to say a fund is clean then they should also instruct auditors to qualify every minute breach because you can’t have it both ways.
Yep, it has been divided into those with a brain and those without.
If they want bigger problems pass this new idea through…… i have been auditing for long enough to almost guarantee this will be a disaster. Come on people use your heads for once
What about an inactive SMSF having to pay Audit & Accountant’s fees every year? Rip off.
If it is registered then they have to do a tax return and it is somewhat difficult to prepare a return without preparing the accounts. If it is truly inactive in that it has no assets then should be closed.
Or do you mean inactive in that a financial planner still collects fees while doing nothing?
As the argument against the three year cycle is that the risks will increase during the period, audit work after three years will baloon up and the costs will skyrocket, the opponents should argue for auditors to park themselves at SMSFs, auditing each transaction as it is journalised. Such continual audit, according to this strange logic, should then remove risks; shrink work to nil; costs to shrivel to zero!
While at it, let us make auditors personally liable for breaches, as a bonus. El Dorado!
If these were in the medical profession, they would still apply leaches in surgery instead of anesthesia!
Straw man argument. Why should auditors be personably liable because someone else does something wrong.
Be like holding FP’s personally liable if the share market goes down.